A limited liability company (LLC) can be an excellent incorporation option for many different types of businesses, especially an individual who offers professional services such as software engineering or consulting.
As a combination of partnership and corporation, an LLC offers a unique combination of advantages to its owners. It gives you the liability protection of a corporation and the preferable taxation mechanism of a partnership. A straightforward LLC setup offers ease of administration on a daily basis. Here are the advantages of an LLC for a professional individual.
Protection Of Personal Assets
The protection an LLC offers your personal assets makes this type of business formation advantageous from a liability standpoint. Your personal assets aren’t at stake when someone sues the LLC for acts or omissions of the corporation. Remember to keep the LLC’s assets and debts separate from your personal finances.
Streamlined Tax Reporting
As a “pass-through” tax corporation, both the losses and profits of the business are reported on the owner’s personal tax return. This makes tax reporting and payment very streamlined for an individual who is a one-person business. Also, there’s no need for advertising the formation of an LLC, so there’s one less thing on your to-do list when you’re getting all the necessary paperwork finished for your new business formation.
As always, it’s advisable to retain legal counsel when you form an LLC to make sure that s set up properly and that all of the tax implications for your personal situation are explored.